環匯 (GPN) 2008 Q4 法說會逐字稿

Ladies and gentlemen, thank you for standing by, and welcome to the Global Payments fourth quarter fiscal 2008 earnings conference call. (OPERATOR INSTRUCTIONS)

At this time, I'd like to turn the conference over to your host, Vice President of Investor Relations, Jane Elliott. Please go ahead.

Thank you.

Good afternoon, and welcome to Global Payments fiscal 2008 fourth quarter conference call.

Joining me on the call today are Paul Garcia, Chairman, President and CEO; Jim Kelly, Senior EVP and COO; and Joe Hyde, EVP and CFO.

Before we begin, I'd like to remind you that some of the comments made by the management during the conference call contain forward-looking statements that are subject to risks and uncertainties that could cause actual results to vary, which are discussed in our public releases, including our most recent 10-K. We caution you not to put undo reliance on forward-looking statements. Forward-looking statements made during this call speak only as of the date of this call.

In addition, some of the comments made on this call may refer to normalized results which are not in accordance to GAAP. Management believes that normalized results more clearly reflect comparative operating performance. For a full reconciliation of normalized-to-GAAP results in accordance with Regulation G, please see our press release filed as an exhibit to our Form 8-K dated today, July 24, 2008, which may be located under the Investor Relations area on our Web site at www.globalpaymentsinc.com.

Please also refer to this Web site for more information on our recent HSBC UK acquisition.

Now I'd like to introduce Paul Garcia.

Paul?

Thanks, Jane.

And good afternoon, everyone.

Before we get started, I'd like to comment on just how pleased we are to be expanding our worldwide HSBC relationship with the newly formed merchant services joint venture in the United Kingdom. This transaction shows our ongoing commitment to expanding our international presence, which we expect will provide long-time opportunities for future growth. This transaction also demonstrates the level of trust that HSBC has in our ability to provide a value-added service to their merchants.

Now for our financial results.

We delivered solid financial results for fiscal 2008. For the fourth quarter our revenue grew 23% to $343.8 million, and normalized diluted earnings per share grew 21% to $0.52.

For the year, our revenue grew 20% to $1.274 billion, and our normalized diluted EPS grew 12% to $1.98.

Our growth was primarily driven by solid performance in our merchant services segment. In addition, our money transfer segment had improved financial results in the fourth quarter largely due to recent favorable pricing.

Now let's look at the segment details.

Starting with our merchant segment, our ISO's continued to drive strong organic growth in our domestic direct channel. Our credit and debit card transactions grew 21% for the quarter with revenue growth of 18%.

For the full year, our transactions grew 26% with revenue growth of 23%

Our fourth quarter domestic direct growth, while strong, reflects the annualization of a large ISO conversion completed during last year's quarter. We continue to successfully sign new ISO's, and I'm pleased to announce that we recently renewed several ISO's for multiyear extensions.

During fiscal 2009, we believe our domestic direct channel will continue to build market share and will achieve strong growth, although, and as previously discussed, we believe at a lower rate than in fiscal 2008, due primarily to the impact of the law of large numbers on our ISO portfolio and the annualization of the new ISO implemented last year.

In Canada, our credit and debit card transactions grew 3% while our revenue grew 36% for the fourth quarter.

For our fiscal year, transactions grew 3% with revenue growth of 19%.

For the quarter, revenue growth was impacted by a favorable Canadian currency exchange and a positive impact from pricing initiatives relating to changes in the Canadian market interchange structure that were implemented in April of 2008. We believe these initiatives will drive strong Canadian revenue growth in fiscal '09, partially offset by the impact of a potential decline in the Canadian currency.

Our Asia-Pacific channel had strong revenue growth of 41% for the quarter and 27% on a pro forma basis for the fiscal year.

We are pleased with the success we had in accelerating the organic revenue growth of our Asia-Pacific channel, as this unit was growing in the single digits when we acquired it. We achieved this improvement in organic revenue growth through sales force initiatives, pricing strategies, and new product introductions.

Our fiscal 2009 growth is expected to be strong, although we expect it will moderate to a more sustainable level compared to recent quarterly trends.

Additionally, we continue to make operational progress on our goal to be fully converted from HSBC's back- and front-end systems by fiscal 2010.

Our Central and Eastern European merchant channel had revenue growth of 40% in the fourth quarter with growth in credit and debit card transactions of 12%.

For the year, revenue grew 17% with transaction growth of 11%. Our revenue growth for the year was driven by a favorable year-over-year Check currency exchange rate, the impact from the November '07 Diginet acquisition, and solid transaction growth partially offset by certain price reductions granted on contract renewals.

Additionally, our fourth quarter benefited from the final anniversary of the deconversion of the previously discussed large customer. For fiscal 2009, we expect to achieve improved organic revenue growth.

Moving on to our money transfer segment, in the US our transactions grew 1% for the quarter while our revenue increased 13% for fiscal 2008 year. US transactions grew 7%, and revenue growth was 3%.

These improved results for our fourth quarter are primarily due to our current pricing strategies.

During the quarter, we closed a number of unprofitable domestic branches, and we ended the year with 793 domestic locations.

In Europe, we ended the year with 90 branches, as compared to 68 locations last year. During the fourth quarter, we acquired 19 branches in Spain, which transmit money primarily to Latin America.

For the quarter, we achieved 23% transaction growth and 52% revenue growth in this channel.

For fiscal 2008, transactions grew 34% with revenue growth at 45%.

Moving now to our recent announcements.

Firstly, we completed -- i.e., closed -- our UK joint venture with HSBC on June 30, 2008, and the new company will operate under the name HSBC Merchant Services.

We paid HSBC $439 million in cash to acquire a 51% ownership interest in the joint venture. HSBC contributed its existing merchant-acquiring channel in the United Kingdom and retained a 49% interest.

The joint venture will provide credit and debit card payment processing services to more than 135,000 merchant outlets in diverse vertical markets.

We also formed a ten-year marketing alliance, whereby HSBC will refer new merchant customers from its extensive branch network to the joint venture.

Similar to our 2001 CIBC portfolio acquisition in Canada, HSBC was operating this as a separate division within the bank with a dedicated and very capable management team and experienced employees. I am pleased to say that this management team, along with approximately 400 other employees, will become part of the joint venture.

While industry credit and debit card growth for the UK market is in the single digits, we believe the JV will benefit from our successful track record of driving growth. Our sales initiatives will include focusing on adding small- and medium-sized merchants, improving sales force training and incentive programs, and using a more proactive sales approach.

I believe this will be a wonderful acquisition for us, and we look forward to strengthening our partnership with HSBC and to executing on our strategy.

I'll now ask Joe to further discuss our financial results.

Joe?

Thank you, Paul.

In our press release, we included GAAP income statements and schedules that reconcile GAAP to normalized results. Our normalized results exclude restructuring charges and certain nonrecurring, noncash items. As Jane mentioned, please see today's earnings press release for more information.

We were pleased with the performance of our core businesses during the quarter and for fiscal '08.

Our merchant services normalized operating income grew 16% for the quarter and grew 10% for the fiscal year. These results were largely driven by the strong revenue growth that Paul discussed and economies of scale benefits, including a normalized foreign currency benefit in the quarter that was similar to third quarter levels.

For fiscal '09 in this segment, we expect strong operating income growth in North America, primarily as a result of changes in the Canadian market interchange structure, continued ISO growth, and a stabilization of our check guarantee channel.

This expected operating income growth is also due to our international expansion efforts, including progress achieved in our existing Europe and Asia channels and the impact of our HSBC UK acquisition.

Moving to money transfer, this segment's operating income was $7.5 million for the quarter, which reflected robust growth of 116% compared to the prior year.

In the quarter, we benefited from favorable pricing, as well as a positive impact from closing unprofitable branches.

For fiscal '09, we anticipate modest money transfer segment revenue growth, coupled with strong earnings growth due to the leverage we have in our fixed-cost model.

Our corporate expenses increased 14% during the quarter and 2% for the full year. The fourth quarter increase was due primarily to timing in our equity compensation program, although these expenses significantly declined for the full year. Our corporate expenses will likely grow faster during fiscal '09 due to a normalization of these expenses.

For fiscal '09, we expect to achieve growth in EBITDA margin compared to our normalized EBITDA margin of 22.7% in fiscal '08. We expect this margin growth to occur at a net result of the factors that I've just discussed on a segment basis, which includes a favorable impact from our UK acquisition.

We anticipate that the joint venture will be highly profitable and will have EBITDA margins that are accretive for us. We are in the very early stages of this transaction, however, and we expect to have a better sense for its financial impact after we have managed the joint venture over the coming quarters.

Turning next to income taxes, our previous tax commentary and guidance focused on our effective tax rate before the impact of minority interest. Due to fluctuations in our minority interest net of tax line item, we believe it is more appropriate going forward to focus on our effective tax rate after the impact of minority interest because this will be a better representation of our income tax provision, especially as our minority interest significantly grows in fiscal '09 as a result of our HSBC UK acquisition.

Our normalized effective tax rate for the quarter after the impact of minority interest was 38.3%, as compared to 36% last year. This increase was primarily due to favorable one-time tax benefit items last year related to income tax statute expiration and certain tax-planning initiatives.

Capital expenditures for the quarter were $13 million, which primarily related to technology and merchant terminal spending.

For fiscal '09, we expect capital expenditures to modestly increase over the $45 million spent this year, primarily as a result of our UK acquisition and continued technology and merchant terminal spending.

Moving to the balance sheet, our reported cash increased to $456 million due to strong cash flow generated during the quarter, in addition to favorable timing differences relating to settlement processing and working capital.

Excluding our merchant reserve funds and other operating cash, we had approximately $214 million in excess cash at quarter end. We used this excess cash to fund a portion of the $439 million purchase price for the HSBC UK acquisition. The remaining purchase price was funded through a new five-year, $200 million term loan with a syndicate of US banks, as well as $25 million in borrowings under our existing credit facility.

Due to our proven ability to generate strong free cash flow and the excess capacity we have in our existing $350 million credit facility, we will continue to pursue our acquisition strategy, which we believe represents the highest potential return for our shareholders.

Paul will now discuss our fiscal '09 guidance.

Thanks, Joe.

Based on current trends and our ongoing growth strategy, we are providing fiscal 2009 annual revenue guidance of $1.620 billion to $1.675 billion, or approximately 27% to 31% growth, over $1.274 billion achieved in fiscal 2008.

We are also providing fiscal 2009 annual diluted EPS guidance of between $2.20 to $2.30, reflecting 11% to 16% growth over our fiscal 2008 normalized diluted EPS of $1.98.

This guidance does not include any other significant acquisitions or potential restructuring or other charges.

I continue to be very confident about the long-term prospects of Global Payments, especially in our international markets and in the continued strength of our North American merchant channels.

Operator, we'll now take questions.

Thank you. (OPERATOR INSTRUCTIONS)

Our first question of the day comes from Pat Burton with CTI.

Hi, and congratulations on the quarter and the year.

My question deals with the UK joint venture. Can you give us any kind of metrics around perhaps the size, revenues, transaction levels, growth rates, margins, anything you'd like to amplify on the HSBC joint venture, please?

Sure. Pat, I'll start, and I'll throw the ball to Joe.

They are the third-largest player in the market. The leader -- the largest is Royal Bank of Scotland, followed by Barclays. It's a market that over the last 20 years has gone through a lot of upheaval. It was not a dual market, meaning you were either a Visa acquirer or MasterCard acquirer. That changed, and there's a big shift. Royal Bank got a commanding position because of an acquisition they made in that last, who was a big provider.

HSBC's been steady, although they are, I think, well poised for some growth given some focus and investment, and that's exactly what we intend to do.

And, Joe, why don't you add a little more color, please.

Sure. We put out a press release, when we initially announced and closed the deal, that indicated calendar 2007 annual revenue of $229 million. We're not going to specifically break out the impact for next fiscal year, but historically the business had grown consistent with the market in kind of the single-digit range.

In terms of margin and cash flow, it's generated a lot of cash flow. It's a high-margin business. The margins from an EBITDA perspective are actually higher than our own margins. So it's a very profitable business for us.

All right. I'll just ask one quick follow-up on something else.

Are there any large ISO renewals coming up over the next 12 months?

Thanks.

No, Pat. We don't foresee any in the next 12 months, and there's always the possibility of ISO's that are for sale, but at this stage we feel very comfortable with our customer base.

Thank you, and congratulations on the year.

Thanks, Pat.

We'll go next to Bob Napoli with Piper Jaffray.

Thank you. Good afternoon.

Given that we're two-thirds of the way through your first quarter, I was wondering -- hoping you could give some update on what you're seeing in the US? American Express said that they saw a significant slowdown in spending in the month of June, and that's obviously on credit cards. I was wondering if you could give some color on what you're seeing in the US for both credit or/and debit cards, if possible?

Of course, we'll try. It's, of course, a different animal. American Express has a different cardholder, and they make different purchases. They have a different financial profile than many of the Visa MasterCard cardholders. And we have the advantage of getting a lot of nondiscretionary expenditures, and I would say -- I haven't studied Amex exactly -- but I would say that they don't have as many nondiscretionary opportunities as a bank cardholder does.

I will tell you that we have taken into consideration what we have seen to date with our guidance. Nobody is immune from a bad economy, but what we have seen has been reflected in what we have given you guys. So we are not, clearly, being impacted to the degree that American Express was.

But you are seeing a slow -- sequentially, you are seeing more pressure on the US consumer?

It depends on the vertical. Obviously, in petroleum you're seeing huge increases, primarily driven by price, and a lot of our verticals that are nondiscretionary uses -- like utilities and education and health care -- are actually seeing upticks. In some restaurant verticals, for example, we are seeing a little softness, and we're seeing a little softness in some retail sectors as well.

We are very fortunate in that we have a lot of very vibrant sectors that are nondiscretionary uses, and that is absolutely helping us.

Thank you. Just a quick follow-up -- thank you, Paul -- on the minority interest and just trying to understand that. I thought that that was primarily or solely for the Asian joint venture. Obviously, it's going to include the HSBC UK business as well. But it was negative this quarter. How would we try to read? Is there anything unusual there, or if you can give just a little bit of color on that, I'd appreciate it.

Sure. The minority interest line relates to our joint venture with Comerica Bank in the US, the Asia-Pacific joint venture, and, of course, next year the HSBC UK acquisition, which will drive that line materially higher.

During the fourth quarter, as I mentioned in my comments, it will be more useful looking at the minority interest on a gross basis. That line is shown net of tax for certain of our joint ventures so that's been part of the impact. The income taxes appeared a little bit higher in the quarter, and the minority interest appeared a little bit lower, but if you adjust for that, the numbers appear somewhat more reasonable.

Thank you.

We'll go next to Bryan Keane, Credit Suisse.

Hi. Thanks.

With the benefit of FX and the new Canadian interchange, I would have expected a little bit higher merchant services margin. Just wondering if there was anything in there one time, and maybe you could give us the Check losses in the quarter?

No, there wasn't any in particular one-item that we included in our normalized results. We were happy with the amounts in the quarter.

The Check business, as we said, as we expected, has definitely stabilized versus some of the losses that the business had in the third quarter. I believe the third quarter losses were $7 million and in the fourth quarter they were $5.9 million. And the variance versus the prior year was actually half of what it was in the third quarter. So that impact of the issues we had in that check-guarantee channel has become significantly less for us this year -- this quarter.

Okay. And then, sequentially, the Canada revenues increased quite a bit. Can we think about that being a good number going forward on at least a year-over-year basis, or how do we think about that?

And, secondly, does the change in interchange, does that drop straight to the bottom line to profit?

Let me take the first thing. The overall -- kind of the macro statement is that you can't exactly look at the fourth quarter and extrapolate. We had a nice currency lift in the fourth quarter. We're actually forecasting that it will go against us through the year. So I think that will actually work against us.

In terms of the interchange pricing, the interchange reduction -- or excuse me -- interchange changes are in large measure passed on to merchants. Because there's so many different interchange, we are able to more appropriately price these transactions, and in many cases the merchants are actually paying less depending on the card transaction. So it clearly doesn't all just drop. It isn't that straightforward.

Assessments actually went up for that period of time also, which is important to note.

Okay. And then finally, Joe, I didn't hear any segment in revenue guidance. Is there any reason for that change?

Segment in revenue guidance for --

I guess going forward for fiscal year '09 by the different divisions.

No. We are giving total company revenue and EPS guidance for next year, and we tried to give some general color at the segment level and for some of the other P&L line items. But our intent is to manage to those lines in total for next year.

Bryan, and also with our first quarter call, we'll be dealing with some segment discussions at that point as well.

Okay. Congratulations on the quarter.

Thank you.

Our next Andrew Jeffrey with SunTrust.

Hi. Good afternoon.

Just to drill down a little bit on the guidance, and you're talking about HSBC contributing at a higher incremental EBITDA margin, and just trying to reconcile that with your total guidance. Is there anything else moving around from a profit standpoint? You said money transfers are going to be good. Is there anything else in merchant from a mix standpoint that might be driving down the non-HSBC margin, the US margin?

Well, let me first clarify. On the HSBC deal -- the purchase price of over $400 million -- we will have to book purchase price amortization associated with that deal, which will be material for us. Our amortization expense will likely more than double next year. I think that may help some of your question in terms of (inaudible).

Andrew, you of course, understand it's actually accelerated how we deal with that too. So we get a larger whack on that for this fiscal period.

Right. And to be clear, though, you're talking about consolidated EBITDA margin that's up in fiscal '09 versus fiscal '08?

Yes, that's correct.

Okay. And then what -- so I guess the allocation of the purchase price is going predominantly to amortizable intangibles, as opposed to goodwill? Is that the answer?

No. It'd probably be more to goodwill, but it's still a meaningful amount. I think it's in the neighborhood of 30% or so. We'll have some more detail in the 10-K. But it's still -- when you have a purchase price -- when the business is as large as it is and it has such a high cash flow business, it will have a higher amortization expense.

Right. And it's accelerated, as you mentioned, in fiscal '09. Okay.

And then with regard to just generally the domestic direct business, you mentioned some sort of broad-based headwinds economically. Anything dramatic there? I mean, you've clearly outperformed and taken a lot of share, and I realize you're anniversaring some pretty good growth in terms of ISO adds. Just from an overall cyclical standpoint or structural standpoint, do you think you continue to take share? Any changes in the market as a result, for example, of the Chase-First Data joint venture being broken apart?

Andrew, we don't see -- other than just broad-based economic impact, we don't see anything in particular. Now, obviously, the Chase Paymentech and First Data breakup, we'll be watching that very carefully. I'm sure there's going to be some breakage there. But these are both pretty smart, focused groups so they're going to do their best to keep that at a minimum. But that could end up being a net positive for anybody that is not Chase Paymentech or First Data. But I don't see anything dramatic -- we haven't in the numbers to date. What we have has been baked in so stay tuned.

Okay. Thanks.

You're welcome.

Go next to Adam Frisch with UBS.

Thanks, guys. Good afternoon.

Hey, Adam.

A key tenet of the story is obviously merchant services operating margins, and we've written pretty extensively about that, and the fact that margins will be expanding from the mid-25% range or so generated in '08. Can you provide some color on what you're expecting there on the profitability of the segment and where it might be coming from?

Let me start with reemphasizing what Joe said about the EBITDA margins. Because of the significant amortization, appreciation, we think that -- especially in our new environment -- we think that's a pretty good measure. And we thought those who were paying careful attention to that metric in particular would be delighted to hear us say that we're expecting to see an expansion in EBITDA margins from fiscal '08 to fiscal '09. So that's a big deal.

We obviously are focused on growing our top line. We're focused on growing our bottom line. If you do that successfully, you will drive margins. We believe that in every margin measure that we can meaningfully expand that over time, taking advantage of the leverage in the business, and all the things we talked to before -- the systems enhancements, the increased profitability in Asia, European expansion -- all the things that we've discussed -- and based on that, we clearly have an expectation of margin expansion. We're not prepared to give specific guidance, however, about those.

Is there anything else you want to add, Joe, to that?

So, now, of course, Adam, in every quarter we will delve into actual results in as much detail as we think is reasonable, but we're just not prepared right now -- other than to kind of give a broad-based statement -- and I think it's a big statement for us -- that we are in fact going to expand EBITDA margins.

Okay. That should definitely help, although I think people will be watching merchant pretty carefully through the course of the year.

We understand that.

As I'm sure you expect them to.

We do, and we understand our job is to make that as profitable as we can.

Yes. Understood. Okay.

So just getting back to the guidance for a sec, just wanted to know what was included in terms of your assumptions on the macro economy and stuff? You started out the first quarter of last year with guidance in the -- I think it was 13% to 17% or so -- and then you came up into the 18%-19% range a couple quarters later. So starting with a beatable number and then raising it throughout the year. Are you incorporating the same kind of strategy at this point in time, or will the macro uncertainty out there impact that at all?

Adam, you're asking us to say are we giving beat-and-raise guidance. We can't comment on that. We obviously are focused on doing the best job we can, and we would be very happy as a management team to do what you just suggested, but our expectation is that this is real guidance, and we hope to live up to it.

Okay.

That was a tough one, Adam, but thanks.

Well, I mean, that's what you've done in past so we wanted to know, and I think it's a worthwhile question.

I know. I understand.

The final question I have is is there anything you can to do accelerate the cost reductions in '09 if revs are a little lighter than expected, or are all the initiatives, like data center consolidation and platform consolidation, all pretty much locked into at this point?

I think that probably some of our caution comes from -- the answer to that question is no. The reality is this business levers extremely well. It doesn't delever particularly well. So if volumes soften significantly, it's very difficult to get rid of enough cost to make up for that in a high-fixed-cost, low-variable-cost business. It's just kind of the reality of it.

But, once again, I want to give you some comfort that our guidance has taken into consideration what we have seen in the numbers. And, believe me, we were watching the American Express results very closely.

Okay. This is really my final one.

Ex the UK deal, what would revenue guidance have been for the year? Do we take the $229 from last year -- single-digit growth could be anywhere from zero to 9% so that's a pretty wide range there. What would we back out from the UK deal in terms of what are you assuming in growth?

Again, we're not going to give a specific number. I think you can get generally close based on the $229 and the single-digit number, but we're not going to break that out at this time.

I'll tell you, I will say that we are -- these guys are on our payroll. At the end of July, we are headed over there for a major kickoff -- this weekend, literally -- and by next quarter we will have a couple months under our belt, and I think we can probably give a little better guidance.

Okay. Thanks.

You're welcome.

We'll go to Greg Smith with Merrill Lynch.

Hi, guys.

Hi, Greg.

Just following on the guidance question, if we do take out HSBC -- and in addition to the -- you know, you're obviously getting this huge benefit up in Canada, which endures through the year. I understand there might be some negative currency. But it still seems to imply that the rest of the business flows quite a bit. I mean, is that the take away we should have, or should we view it as conservative, or am I missing something here?

Well, again, the domestic direct channel we are saying the revenue will probably slow versus the 23% growth that we had in fiscal 2008. It's just not likely to stay up at that level, especially given the current environment. We have a known factor, which is the major ISO conversion that has since annualized. But that being said, we still expect strong growth above market growth in the US but not the level that we've seen in 2008, and that obviously has a bigger impact on revenue than it does on earnings. I think that that's probably the biggest driver when you take out the FX. I still believe that we have solid revenue growth even when you back out the HSBC deal.

Okay. And then can you give us what the FX benefit -- in a sense per share -- the FX benefit and the Canadian interchange, both of those, for the quarter?

I can give the FX benefit, which has been relatively consistent. The EPS has been in the $0.04 to $0.05 range over the past couple of quarters. The revenue, I believe, was approximately $12 million for an FX benefit.

On the interchange benefit, we don't intend to break that out separately.

Okay. And the vast majority of that $0.04 to $0.05 is Canadian -- right? -- Canadian Dollar?

Yes, it is.

Okay. Great.

And then just with the UK joint venture, how quickly can you guys move into other European countries? Is that years off, many years off, or can you do something a little more shorter term in the next 12-18 months?

I think the real opportunity in that is to expand that partnership, and there's a couple ways to do that. We can expand within the UK organically, which is our intent; there are acquisition opportunities, which are our intent; and, clearly, there are opportunities to work with HSBC -- and potentially other partners -- to expand to other European domains. The UK is the largest within the EU, it's a great place to be, and that's exactly what our strategy is, Greg. So I would look for some near-term opportunities for us to grow this business. You know, acquisitions are a lot trickier, and those can take a long time, but that's certainly our intent.

Okay. And then last question, just on DolEx -- obviously, you had a very nice quarter there. Has this resurgence sort of changed your view on the future of this business and how you view it as whether or not it's going to be part of the portfolio long term?

I think it's fair to say we are pleased with the DolEx results. It's also fair to say it still comprises a very small part of our overall company. Our company is -- particularly with this acquisition of HSBC -- is now becoming a primarily processor of bankcard transactions, not a money transmitter. So I would say that question still is being evaluated.

Great. Thank you.

You're welcome.

We'll go to Charlie Murphey with Morgan Stanley.

Thanks very much.

Paul and Joe, now that the UK acquisition has been completed, how would you describe your M&A appetite in fiscal '09?

I'd say it's strong, Charlie. We have the capacity, and we certainly have the appetite. In fact, I'll go so far as to say we have an expectation of announcing some more transactions, and I think that's probably a near-term expectation. So what we're interested in doing is expanding our footprint internationally, and I would look for some more announcements that support that.

Okay. And then shifting to the money transfer segment, could you elaborate a bit on what type of EBITD growth you may expect? It's very rare to hear of price increases in the money transfer business. What gives you confidence in the EBITD growth for '09?

It's simply a function of the current pricing that we have already versus the average pricing that we've had during the course of fiscal 2008. We don't need to raise pricing during fiscal '09 to hit those numbers. I think that's an important point. Pricing needs to stay generally stable -- even could come down some -- and we still would likely achieve -- we expect to achieve strong growth.

It's also a function of this lower branch count. We closed an amount of unprofitable branches, and that will aid us in fiscal '09 as well.

Okay. Thanks.

We'll go to Dave Koning with Robert W. Baird.

Hey, guys.

First of all, Joe, I think you mentioned that amortization expense might double or maybe a little more than that with the UK acquisition. That would imply something like a $0.25 delta between GAAP EPS and the way that several of your, I guess, loose kind of financial tech comps report their cash EPS. Is that something you'd ever consider given, I guess, guidance would closer to the $2.50-plus -- maybe -- range under that scenario?

Well, first let me say that the additional amortization expense -- remember, this is a joint venture, and we will only be booking 51% of the earnings. So not all of that necessarily flows to the bottom line.

In terms of cash EPS, it's something that we can consider. We've not in the past because our amortization has been relatively small, but we will evaluate that for next fiscal year.

Okay. Good.

And then, secondly, I guess I'm still not perfectly clear on the tax rate versus the minority interest line. Should we think of the tax rate now being in the high-30s and then the minority interest line, I guess, ex-UK being a little lower of a drag than it's been?

I'm sorry. I'm not sure I understand your question. Can you --

Sure. I guess, first of all, should we expect the tax rate now to stay somewhere in the high-30s and then, conversely, the minority interest drag being a little lower?

Our average effective tax rate after minority interest for the year was in the mid-30% range. I believe it was 35 1/2% if you -- again, adjusting for the taxes that are embedded in the minority interest line. If you had any questions about adjusting for that, we have a schedule in our 10-K, and Jane Elliott can also help you to recalculate that.

The 35% is kind of a baseline number, and for next year we'll likely get a benefit from the UK acquisition because tax rates are somewhat lower in that market.

Okay. And then just, finally, if we just look at the Canadian currency today and take that going forward, you'd have a slight benefit again this year relative to last year. But are you just trying to be, I guess, a little conservative in guidance by assuming a little bit of a drag?

The foreign currency in Canada ran up so much during the course of the year, and we've looked at foreign currency forecasts on either Bloomberg or other sources, and most forecasts are assuming that that rate is just not sustainable to stay up as high as it is, which is basically parity with the US Dollar. And with the expectation for higher interest rates in the US during the latter part of the year -- or even the mid part of our fiscal year -- there's an expectation that the FX rate will come down some to more of a mid-90 level. And we don't know what FX rates are going to be, and we'll obviously continue to break out the FX impact for us, but I think it's prudent to not assume that that will continue for fiscal '09.

Sounds good. Thank you.

We'll go next to Dan Perlin with Wachovia.

Thanks.

During the past, when you guys have done acquisitions, I think -- at least myself -- I've overmodeled on the revenue growth expectations, and it seems like you always were kind of pruning some part of the business or adjusting it to your liking, and that always caused the initial revenue number to be a little bit lower. Are you going to have to do that with HSBC? You made it sound like they're running on their own and you're going to just kind of add some firepower to it, but I'd like to get your thoughts on that?

Well, Dan, typically, in some of these deals they've had credits or customers that we thought were not reasonable credits, and we've kind of pruned this portfolio. So it's in pretty good shape. The business has not been growing -- it's been growing at about where the market was growing, so they were kind of keeping share, not necessarily gaining or losing, and we believe we can grow it much more significantly. So, if anything, we're hopeful that we will accelerate this, and you should see it dip downward. You should see some growth.

But, once again, we haven't even started yet so this isn't something you can do in a week or a month or a quarter. It's going to take time to inculcate all the things that we have planned for this business and have those bear fruit.

Okay. But when you say you pruned some lower credits, does that imply that you gave a calendar year '07 number of $229, but you prune those credits, that number may be a bit lower and you're going to grow it faster than mid single digits, but we're still going to -- again, I would still end up on an absolute revenue basis have overmodeled that. So I just want to make sure I'm clear on it as I start this one around.

That's a great question, Dan. Let me be clear. We'll be growing off the $229 number.

Okay. That number includes it.

And then, as you've thought about your budget into 2009 for this acquisition in particular, how should we think about the EBITDA expansion? Is it heavily weighted to the back half of the year? Is it going to skew up gradually throughout the year? Can you just comment about the progression there?

Not expecting any significant fluctuations. I mean, there's always some level of seasonality. The growth may be somewhat higher toward the end of the year but really not seeing a -- not expecting a major difference among the quarters.

And there's no abnormality to seasonality in the UK for this card portfolio?

Well, again, as Paul said, we haven't even owned the business for a month. I'm sure there's some level of seasonality. I'm sure the summer months tend to be higher than the winter months, excluding the impact of holidays, but I really don't have a good sense for what to expect on the seasonality until we own the business for a few quarters and really have a deep-dive understanding of the financial drivers.

And did you say -- I think I missed this -- but in the merchant services EBITD this quarter, there wasn't some sort of tax benefit included in that, was there? Like last quarter there was a $7 million benefit. Was there one in this quarter?

No. No, there wasn't.

No, there wasn't; right. So the 38% tax rate this quarter was a function of you calculating it differently on the minority interest line, or what made it just drive up so high sequentially? And even year on year it was just a --

Again, if you look at it on a -- before effective -- before minority interest, it looked like it went up 600 basis points compared to last year of 33%.

But it only went up 200 basis points when we adjust for that roughly.

That's right.

So what drove that, I guess, is my question?

In last year's fourth quarter, we had about 200 basis points worth of favorable impact from income tax statute expirations and other tax-planning items. Our generic operating tax rate, excluding any kind of one-time items, was 35% this year. It was 35% last year.

Yes. You said that. I'm sorry. I missed that.

And then, lastly, as you look at -- as you're thinking about allocating capital to the various business segments -- I mean, I think it's pretty clear that domestic money transfer is not going to get a bunch -- you did make some acquisitions in the European piece but -- how would you describe allocating to -- call it -- your Asia-Pacific joint venture versus UK versus the traditional Central and Eastern Europe footprint? Where are you going to throttle up mostly?

I think that -- those are all our favorite children you just named, so we'll try to give as much love as we can to all of them. I mean, Eastern-Central Europe we do have some big plans there. We are obviously -- Asia-Pacific we're excited with the revenue growth, and we have a lot of high expectation of expansion in that market. Obviously, what we're doing at HSBC is all about investment and focus and execution. So those are all -- and domestically too. I mean, we're still getting some great growth from, particularly some very strong ancillary partners, and we intend to add some more.

Probably the one exception is that we are putting some money into the money transfer business, but it's not getting the lion's share.

And then two quick questions.

Repricing on the ISO's that you re-signed, can you just give us some sense of price concessions that you had to give? Single? Low single digits? Mid single digits?

It was, I would say, modest, quite frankly. These guys are pretty big, and they already are benefiting from some pretty good pricing. But there's always something different for each one, and we're not going to be specific, but everybody wants something that's important to them -- a different product, access to something -- and once you know your customer -- so I'm not suggesting that we don't offer things that are incentives, but they're not necessarily pricing oriented.

Right. Got it. Okay. I'll let that be my last one. Thank you.

Thanks, Dan.

The next Robert Dodd, Morgan Keegan.

Hi, guys.

If I go back to the currency issue for a minute, given the sensitivity to the Canadian exchange rate, I mean, can you give us a bit more of a quantitative answer about what you're putting in for ForEx for this year because, I mean, if we look at this last quarter you said about $0.05, the exchange rate changed about $0.10 year over year -- on an annual basis, a penny on the exchange rate seems to be about $0.02 on earnings. That's pretty, frankly, probably more significant in the HSBC JV if you don't give us more color on what that number is -- what number is baked into the guidance, frankly.

Well, for fiscal '09, there's not a significant impact that we're forecasting. If the exchange rates stay where they are today, we'll get a lift in the first quarter, and that that probably will be it. There are forecasts out there that show that that rate may modestly decline kind of ratably through the end of fiscal '09. We're not talking major changes, but it may be a bit of a drag, maybe a percent or two on earnings per share, but, again, we've said historically we're not going to specifically quantify the FX rate that we're assuming, but we're not assuming a major shift.

Robert, that's a very fair point, however. I mean, if in fact you see FX improvements to our benefit, then that would be an upside. If you saw it go down significantly and knew we baked in some decline but we didn't bake in a significant decline, that would be a negative, and we'll give as much color on that per quarter as we can.

Okay. Thank you.

And then another one on Canada actually. If we look in Q4, adjust for the currency change year over year, it looks like the business was up in the low-20% range in local currency with only 3% transaction growth. I mean, that seems to indicate very high benefit on pricing. Are you planning on giving any of that back as we go forward, or can we carry a pretty healthy price increase through the rest of -- at least through three quarters of '09?

It's a little more complicated than that because there's not actually a pricing increase and there's nothing really to give back, but how you calculate the changes in interchange that the associations put in, there could be some tweaking that could result in us enjoying less going forward, but we have baked that in as well. So our forecast -- our annual guidance -- does consider less benefit from Canada going forward from that aspect as well.

Okay. Thank you.

You're welcome.

We'll go next to Tien-tsin Huang with JP Morgan.

Hi. Thanks.

Hi, Tien-tsin.

Thanks. Couple follow-up questions, I guess, from the ISO side. Any change in the contribution margin from the ISO channel in the fourth quarter? I think you mentioned that the pricing on the renewals were modest so (inaudible) any change in contribution margin in '09 from the ISO channel?

No. In the fourth quarter, there wasn't significant change from where we were during the first nine months of the year.

Okay. And then same with '09, I guess, sounds like with no major renewals coming up and modest impact there? Feels like things are relatively stable?

Yes. I mean, it's always going to be a competitive market,, but not baking in any kind of major shift in margin up or down.

Okay. And then just to be clear on the UK side, should we not assume any incremental investment on the front end as you bring this business in to global?

Well, part of the CapEx -- Joe outlined the spend for the coming year -- is going to include the work to convert off the back end at the HSBC UK, together with the work that's being done in Asia. Now, Asia is much more complex because there's a lot more units to have to convert, where the UK is a single site, but it's a lot more merchants. So you'll see spending, but that's already been factored into the guidance in capital.

Okay. And then, Joe, can you remind us again -- I'm sorry -- how you're funding the UK deal and your debt levels now post the deal?

We used $214 million of excess cash. We used $200 million in a term loan, which is a five-year deal. And we used $25 million in borrowings under our existing credit facility. So those amounts may fluctuate somewhat, but at least as of the day of closing, we had $225 million of debt.

Okay. Got it.

And then, Paul, maybe just really quickly, how big a role did CEPA play in your consideration to acquire the business on the UK side?

I'd have to say not a huge role. I think it's a major upside, but if CEPA didn't exist, we would still jump into this thing. This is just a very sweet deal. It's good for HSBC; it's good for us. It's just a sweet deal. CEPA is kind of icing on the cake, Tien-tsin.

Okay. That's good to know.

Then, lastly, just a clarification, and I'll jump off. Asia-Pac -- I think you mentioned that you're expecting growth to moderate. Do you mean moderation to the pro forma growth rate that's, I think, in the high-20s?

I think what we were saying is that -- yes, basically. I mean, we're saying that this business is not going to sustain that level of growth as it gets bigger and bigger and bigger, and that's all. We were just cautioning not to model that. I think everyone kind of got that.

Got it. Thank you.

You're welcome.

We'll go to Franco Turrinelli with William Blair Company.

Hey, Paul. Hey, Joe.

Hey, Franco.

Two real quick ones here because I think most of the questions have been asked.

Joe, what's the amortization piece of deprecation amortization?

How much is it?

Yes. In the quarter.

I don't have that in front of me. I believe it's roughly $15 million or so per year, but let me look for that, then I can --

Okay. Well, I mean, that -- and when Paul -- I think -- I forgot if Paul mentioned or if you mentioned that the amortization would approximately double. That's what I was trying to get a handle on.

I do have it here. The amortization in the quarter was $4 million, and for the full year it was $15 million.

And when I said it would approximately double, that's not a precise number. I think it actually will be higher than that. My only point was that that line is going to significantly grow, and I think that the question was on the EBITDA margin, what else were you missing? Well, there's a big piece between EBITDA and operating income, which is the amortization.

Right. No, exactly. And I think -- and obviously it's important to kind of pull out the amortization versus the depreciation. Thanks.

Hey, I don't mean to be dumb here, but you've had HSBC -- or we should model it -- as of the end of June -- kind of July 1 -- so two months in the first quarter of the fiscal '09 year?

Two months in the first quarter, that's correct. Eleven months during fiscal '09.

Okay. Great. Thank you very much. Congratulations.

Thanks, Franco.

We'll go to Wayne Johnson, Raymond James.

Hi. Good afternoon.

Hey, Wayne.

To go back to the G2 platform -- the conversion rate there -- is that a little bit faster than what you told us about a couple quarters ago? Did I hear correctly, I guess is my question, that everything in Asia should be converted by -- did you say by fiscal 2010, or did you say -- what did you say on that? I apologize.

I think in the script, I believe, Joe read, he was talking about the back-end conversions being done by 2010. The Asia front-end conversions, which would be G2, we still have some dependencies, but the current thinking is early to mid fall that we will begin front-end conversions. We've already started the back-end work. Both of those efforts will also begin for the UK operation as well.

I think the way -- the long and the short of it is, it's on schedule. If we gave you a sense that it was taking longer than that, it's on that schedule, and we're on schedule.

Then that's good news. And so I guess my follow-up question is what impact on margins does that have?

Will it have at that point?

Yes.

We haven't given that fiscal '10 guidance. That's a good try. But, Wayne, it will be material so stay tuned.

Okay. Terrific. Thank you very much.

You're welcome.

We'll go to James Friedman with Susquehanna.

Hi. Thank you. Most of my questions have been answered.

But just for modeling purposes, Joe, if you could help us with some more precision about what we should be anticipating for interest expense for 2009?

Well, again, we're not going to break out specific amount, but we had $225 million of incremental debt that we did not have this past year. We have a -- most of it is under the term loan. I would expect the interest rate to be in the low- to mid-single-digit range, and that should help in your modeling.

And, James, to further complicate that, we are hopeful that we'll do some other deals too. So that number's going to be moving around.

Understood. And then with regard to the amortization, what is the assumed useful life in the amortization of the goodwill?

We will have all of that detail in the 10-K. I believe it's 12 or 13 years, but, again, please see our 10-K.

Okay. The last thing is should there be a material change -- I'm sorry if I missed this earlier -- but should there be a material change in the minority interest line item, which was $10.9 million, relative to the acquisition?

Relative to the UK acquisition?

Yes.

I mean, not in the fourth quarter of this year, but for fiscal 2009, that minority interest line will grow significantly.

Okay. Maybe we can discuss that offline.

Okay. Sure. Absolutely.

We'll go to Bob Napoli, Piper Jaffray.

Thank you. A few follow-ups.

Canada -- was the pricing change done at the -- what was the date? Was it for the full quarter?

No, it wasn't. I think it was April.

Joe, is that accurate?

So it was April-May. So it was two months of Q4, Bob.

Okay. Thank you.

And you haven't really said how -- I mean, you said that the HSBC deal would be accretive in the first year. Can you quantify that, and does that include the amortization expense?

Yes, it is accretive with the amortization expense. We haven't quantified because we are not certain at this point the extent of growth, the extent of investment, and there's a lot of moving pieces here, other than we are sure of accretion.

Okay. Well, I mean, say, less than a dime probably the first year, something like that?

Not going to guess.

All right. And then just on the acquisition market and strategy with -- I mean, I just wondered if you could give an update on what kind of opportunities you're seeing, and I know international is the most attractive to you, and I just don't know if some of the stress that we're seeing in the market, and obviously here in the US we have a number of banks that may be spinning off some assets here and there, but it doesn't sound like those are of interest to you at this point. And is everything that you're interested in primarily directly in merchant acquiring, or is there anything else broadly strategically that's of interest to you.

We are almost primarily -- I would say exclusively interested in merchant -- we will say exclusively interested in merchant acquiring. But we are interested in all the countries we operate in, including the United States, and financial institutions are making decisions, and that's of interest to us. Obviously, we're very focused in Europe and Asia as well.

Okay. And then in the US credit debit -- the growth trends -- have you seen a divergence in the trajectory of growth between the two? Obviously, debit's growing a lot faster than credit is, but I just wondered if you saw a divergence. If debit was relatively steady, and you've seen a fall off in credit?

We look at all the same statistics that the associations report. Our portfolio is slightly different. It's not as debit centric as the universe of business so we don't track exactly, but we think the trends that generally you're seeing, we're seeing as well.

Okay. And then just last question. I don't know if you can give this number. The transaction growth for money transfer in the US in the May quarter?

One percent for the quarter.

One percent. Thank you.

You're welcome.

We'll go to Ed Antoian with Chartwell.

If you guys could make this quick, I have to go eat dinner.

And we won't hold you from your repast.

Thank you. But if you could just give us maybe just a minute on what are the margin opportunities in Asia-Pac, and what do you have to do to get there other than just transferring to the integrated system?

I think that is a big one so you don't want to underestimate that, but, Ed, we've also made huge investments in sales people. We have 300 sales people in Asia, and they are not entirely paying for themselves, particularly in areas like China. So you have to build critical mass in that business. So it's about growing revenues more aggressively. It's about having the systems to appropriately price your merchants. In some cases, we're disadvantaged because associations are changing assessments in interchanges, and our systems can't necessarily keep up with them until such time as we can make conversions on that, and that's at a disadvantage. So it is all of those factors.

And it's going to take some time. I mean, this is definitely a building year in this fiscal year, and we are going to see margin improvements in Asia, and this will build -- I think long term that these will be accretive margins to our overall merchant margins.

Only because you guys have told us to expect growth rates to slow down -- organic growth rates to slow down in fiscal '09 and, I assume, going forward, what does it take, then, to increase productivity of the sales people, and is that not almost conflicting with your statement that organic growth will slow?

I think the comment that we had in the script was that it was at 40% something pro forma, and we're saying, you know, that's a long number -- I mean, that's a big number. What I have said is we believe this business can grow at 30% sustainable rate and sustain an accretive margin, and we're standing by that. That's not going to happen right away. The business was barely growing, Ed, when we took it. So it is indeed growing, but we are cautious with our guidance going forward other than generally bullish on the business.

Let me just clarify because someone else asked this question. Correct me if I'm wrong, but you said pro forma revenues at Asia-Pac were up how much in the quarter?

Forty-one, Joe, was it?

The reported number was 41% and --

But the pro forma growth was?

Pro forma growth was 27% for the fiscal year.

Okay. And I thought that was the growth rate that you were referring to that couldn't be sustained?

You know, Ed, now that I reflect on my comment, I think I did say that, and what I was focusing more on was not being pinned down for a precise growth rate until we get a little more information behind us, number one, and, number two, I was referring to the higher number, clearly, as something that we couldn't sustain.

Okay. Fair enough.

That's a good clarification. Thank you.

Okay. And we'll go to Tom McCrohan with Janney Montgomery Scott.

Just a quick question. Wanted a clarification actually.

The guidance that you provided in the past -- kind of the revenue detail guidance -- you didn't provide it today. Did you say, when someone asked previously, that we can expect you to start giving that granular guidance going forward next quarter, or is that not going to happen?

Our approach is to give guidance for total revenue and for total EPS and to discuss the actual results in a reasonable level of detail -- kind of consistent with how we've done -- and explain variances and give color for where we think the amounts will go but not to put a specific quantified amount out by channel for fiscal '09.

Okay. Sorry that I'm being so numb on this. So in the past you would say like "domestic direct high teens to low-20% growth," that kind of color. That you're not going to do any more; correct?

That's correct.

Great. Okay. And for the Canada -- I'm sorry the UK alliance now with HSBC, there was that $229 number that you kind of gave on the revenue side for calendar '07. Is there anything in addition to the revenue, like margins, that you can discuss with us, if not specific just on a relative basis? Like are the margins higher or lower or relative to kind of your domestic business?

The color we gave on the margin was that the EBITDA margin's higher than our total company EBITDA margin is today. It's a very profitable, high cash flow business. As Paul said, we've only had the business for a month. We'd like to own for it at least a few more quarters before we really give more quantified expectations for what we have.

Okay. Fair enough. Thank you.

We'll go to Adam Frisch with UBS.

Hey, guys. Just a follow-up. Sorry for being kind of thick headed on this, but judging some of the e-mails I've gotten so far, I don't think I'm alone here.

Talk to us a little bit about ex the HSBC acquisition, are margins for the company going up in '09 versus '08, and how much of that is due to things that are with the core business, like merchant services, things that are kind of in your control and not having anything to do with FX and stuff like that? I think, if we don't get that point clarified, there's going to be some confusion out there tomorrow.

Well, Adam, I think it's -- what we're trying to do is not give specific margin guidance, but if you looked at the actual results for fourth quarter as a company, our margin actually increased fourth quarter of this year versus fourth quarter of last year. There was a margin increase. We understand it's our job to increase our margins across the board. We did feel comfortable giving EBITDA guidance, and the HSBC is absolutely a piece of that. But I don't know if we're prepared to give the granularity that you're asking for in that question.

Can I ask it this way? The amortization, according to your 10-K, is in your COGS; correct?

Yes, that's correct.

Okay. So what you're saying is you're EBITDA margin is going up despite the fact that your cost in your COGS line -- the amortization is going to go from 15 to something like 30-plus, and despite that increased cost, you're still increasing your margin? Is that the message we should take away from this?

Yes. On the EBITDA level for the total company, that's our expectation.

Okay. So I initially had a problem with the fact that you weren't giving granular guidance on business segment level. I thought that was a step away, and I think that raised some concerns. But what you're saying is the company ex -- even though you're including amortization cost in your COGS, will still be more profitable in '09 than it is in '08?

If you're asking of the EBITDA margin is going to go up in fiscal '09, yes, we expect that it will, including the impact of HSBC.

Okay. That mitigates somewhat the fact that you're not giving granular guidance on each segment. I'm glad I cleared that up.

The only other question I had was the tax rate in '09. Joe, did you say that's going to be 35%?

No. I said the 35% is kind of the baseline for this year and it will likely come down just from a mix perspective because the UK deal will be a large part of our business and the UK statutory rates are in the high-20%, low-30% range. So it will likely come down from the 35%.

To what number?

Again, we're not going to give a specific amount for that guidance. We'll give revenue and EPS guidance, and we will explain our tax rates on an actual basis by quarter without giving a finite expectation for next year.

Okay. Don't want to belabor point, and I know it's getting pretty late in the hour, but my last question is why the change in guidance strategy? I think some people will probably want to know why you guys are changing a little bit?

Adam, that's a fair question. How we manage our company -- I mean, we manage for top-line growth, we manage for EPS growth, and this is becoming a big company with a multinational footprint, and there's a lot of moving pieces. But that's primarily what we focus on. And I think EBITDA is a reasonable measure as well. So we said, okay, what do we focus on as a management team? What do we feel comfortable giving guidance on? And that's what we're doing.

Now, of course, on actuals we'll drill in as much as reasonable but -- so that's what we feel comfortable with, and I hope you do as well.

Okay. Thank you.

We will take our last question from Glen Green with Oppenheimer.

Afterwards, Mr. Garcia will give his closing statement.

Thank you. Good afternoon, and thanks for including me in the last queue here.

I don't want to belabor this, but I did want to go back to what I think is probably the major thing in the quarter, and I'm not sure I got an answer after the last hour actually.

The merchant services margins being down about 150 BP's year over year with the strong benefit from Canada pricing and the FX, I'm just trying to reconcile why the margins were down so much with that significant incremental benefit in Canada? Are there a couple of things to sort of call out? Were there incremental investments in the quarter in front of next year? I'm just trying to understand that.

The margin decline in the quarter was assumption of our ISO growth, which is contributing operating income dollars, and we're growing market share in that channel, but it's a lower margin channel compared to the rest of our revenue, and as a result, it has a reported unfavorable impact on the margin.

Other than that, there really was no other items that would have driven that unfavorable --

So it's really the same dynamics that have been going on for the last six, seven, eight quarters.

Yes.

Yes.

Which is probably sustainable going forward, all else equal, into 2009?

Well, I think with the exception of a big margin accretive acquisition in the ranks that will have an impact on the impact that the ISO's has. So that's the kind of message.

You know, Glen, I'm delighted we had a chance to take one more crack at this because we look at this as -- we're thrilled with 11% to 16% EPS guidance. And with all the moving parts and with an economy that has some storm clouds on the horizon, we're pretty proud of ourselves with that. And we also believe that we clearly understand it's our job to drive our margins.

But giving up a granular forecast and having that kind of laser-like discussion on those margins that kind of fluctuate monthly for us, we didn't think was necessarily helpful for the investors, and we'd like to kind of move the focus to what's our earnings growth? And so that's one of the motivations here.

Are you going to still be reporting merchant and money transfer margins going forward?

Yes, we will.

Now, Glen, that's a great point. This is not about what we report. This is about guiding for a full year.

Okay. Okay. I'll leave it at that. Thanks.

Thank you.

Okay, operator, I think that concludes all of the calls in queue so I want to thank you for joining us on our call today. We appreciate as always your support of Global Payments and we hope to see all of you at the New York Stock Exchange on October 15th, for our annual investor conference. Thank you so much.

Ladies and gentlemen, this conference will be available for replay starting today at 9pm and ending at 9pm on August 7, 2008. If you wish to listen to the replay, please dial (888) 203-1112 or international participants can dial (719) 457-0820.

This concludes our conference for today. Thank you for your participation and you may disconnect at this time.